return to letters list

While the Fairfax Press is having a rest, today’s Australian continues analyses of the statements by Gillard and raises more questions relevant to interpreting her behaviour not only at the time the slush fund was created but in relation to her recent explanations too. These include:

>Is it appropriate to assume that there is nothing wrong with union officials in Group A of Union X to establish slush funds to finance the election of officials in Union X who are favoured by those in Group A but unbeknown to others in the union ?

While such questions will normally be answered in the negative, it appears that this type of behaviour is regarded as acceptable by the present government and is common place in some industries even though it is not in the interests of most union members.

The solution?

The authors of the articles below appear to favour an inquiry into the governance and conduct of the union movement. But the inquiry into the building industry which led to the establishment of the ABCC has already identified the problems and the appropriate response. There would seem ample justification for any new government to take early action along similar lines to those adopted for the building industry

Des Moore

Prime Minister, you say it's routine. We say it's rotten

Editorial, The Australian, December 04, 2012

IF anyone, apart from Julia Gillard, thinks an inquiry into union maladministration is unnecessary, we would refer them to the transcript of the Prime Minister's press conference eight days ago. Ms Gillard sees nothing particularly odd, apparently, about union officials running slush funds. "This did not strike me as a non-standard transaction," she said. After all, it was better than keeping money in a shoebox. It was "a matter that at the time struck me as pretty routine, pretty low-level. Indeed, so low-level that I didn't even charge for it."

What does it say about trade unions that people such as Ms Gillard, who have spent their adult lives in the labour movement, describe these sort of shenanigans as "pretty routine"? There is no suggestion Ms Gillard was aware of the large-scale embezzlement that later occurred. Her only role was to provide legal advice to her then boyfriend Bruce Wilson and his bagman Ralph Blewitt, that enabled them to incorporate an association with the WA Corporate Affairs Commission. As Ms Gillard understood it, Mr Blewitt and Mr Wilson were operating what she describes as a low-level slush fund, the kind that organised fundraising dinners and made payroll deductions. It seemed to her to be unremarkable; apparently it is commonplace behaviour for union officials.

To those outside the union movement, however, even this kind of slush fund is evidence that something is deeply amiss. The investigation of the AWU affair has shone a light on a side of the labour movement most citizens assumed would be illegal. If corporate executives parked other people's money in sham accounts for their own benefit, they would be breaching their fiduciary duty to shareholders and could expect to find themselves in serious trouble. It is not clear to us why a lesser standard should apply to union officials who have a fiduciary duty to their members. Most modern unions have large turnovers and operate superannuation funds managing hundreds of millions of dollars. Yet their tax-free status allows unions to be run with far less transparency than a business of a similar size. Nor is this an isolated case; the full extent of corruption in the Health Services Union is yet to be revealed.

Even uglier, however, is the evidence of standover tactics to extort a ransom from construction companies in return for industrial peace. A former AWU administrator, Wayne Hem, tells how industrial disputes would inexplicably "go away". This mobster behaviour would be called blackmail in any other walk of life, yet the union culture has become so morally corrupt that some officials are prepared to go to any lengths to line their pockets. How did it come to this? How did the once-noble institutions that protected workers' rights turn into private fiefdoms for the exercise of private gain? The very concept of an election slush fund is anti-democratic, favouring incumbent against challenger. It seems utterly incongruous that a movement that exists to serve democracy should run as an oligarchy. Now that the lid has been lifted on this murky world, a judicial inquiry is inevitable, and it is within the Prime Minister's power to set its terms. Alternatively, she can stonewall and risk the election of a Coalition government that would almost certainly call an inquiry itself.

No insight if wrong questions asked

Gary Johns, The Australian, December 04, 2012

FORMER AWU trade union leader Bruce Wilson chose to be interviewed by 7.30 on the ABC. Good choice Bruce. Here was the principal character in a huge political drama.

His story had the potential to bring down, or clear, not only himself, but also his former partner, Julia Gillard, of wrongdoing.

But Wilson was subject to such incurious questioning by the 7.30 program that I was supremely frustrated.

The only positive to come from the interview was that former Slater & Gordon equity partner Nick Styant-Browne, relieved of confidentiality obligations, released more details from the transcript of Gillard's Slater & Gordon exit interview.

The transcript provided evidence that Gillard argued for the non-union nature of the association at its registration in WA, knowing it was used as a fund for the re-election of union officials.

Gillard had an obligation to the AWU, to the West Australian Corporate Affairs Commission and to her employers to tell them about its real purpose.

To the extent that she revealed nothing outside the Slater & Gordon interview suggests that she understood the importance of this misdeed. What else did she know?

Close questioning of Wilson may have enlightened matters. Instead, the 7.30 interview (both live and from the transcript) produced single questions and denials, but few follow-up questions designed to open up further lines of inquiry.

Wilson wanted to clear the Prime Minister of any wrongdoing in the establishment of the AWU slush fund.

But, under questioning, it was as if Wilson were an innocent by-stander, peering from behind his curtains, "living in a virtual state of siege" at the baying press.

Wilson admitted that in 1992 he established the Australian Workers Union Workplace Reform Association and that it was set up to "benefit the members of (the) union".

He admitted that Gillard "filled out on the front page the words 'Australian Workers Union Workplace Reform Association'."

Asked if it "was a re-election fund or was it designed to promote workplace reform?" Wilson answered: "There was probably about seven or eight points about what the association was hoping to achieve" and, "we raised money (from firms) to be elected to carry out the objectives of the association".

Wilson admitted to informing Gillard that the funds would "be used to finance campaigns for union officials or people that weren't currently union officials that we wanted to bring into the organisation".

It would have been useful at this point in the interview to ask Wilson to name any program run by the fund, which purported to benefit AWU members, and what contributing firms were told was the purpose of the fund.

When asked "how much did you benefit financially from the operation of the fund?" Wilson replied: "I didn't benefit financially from it at all".

When asked "was $100,000 used from the slush fund to purchase a property on Kerr Street in Fitzroy?" Wilson answered: "Yes". When asked "was that illegal?" he answered: "No, not at all".

If he thinks there is nothing wrong with using the fund's money to buy a house, it would have been good to ask him why he thought that. Did he tell Gillard where he was getting the money from? There is no evidence he did. It would also have been useful to ask how the purchase of a house could benefit members. Or whether there were any members of the fund other than he and Ralph Blewitt. Or whether the funds were actually used for an election.

When asked "are you saying that Ralph Blewitt is the only one that used money from that slush fund inappropriately?" Wilson replied: "He was the only one that had access to it". It would have been useful to ask why, in his capacity as AWU secretary, he was not a signatory.

Wilson admitted that he lived in the Fitzroy property. When asked "who benefited from the sale of that house?" Wilson replied: "I didn't even know the place had been sold. I heard subsequently that it had been".

When asked "where has all the money gone?" Wilson replied: "There was money sent back to the employers".

It would have been useful to ask to whom the monies were sent, or which firms supported the slush fund, or whether those firms knew that the money had been used to purchase a house. When asked if people were paid back, Wilson replied: "There was a meeting at the Commonwealth Bank and a series of cheques were sent back to from where they came".

From whom did Wilson know the details of the bank meeting?

Asked if he regretted not going to the police, Wilson answered: "I do in retrospect, given the ... wheels fell off the whole construction industry branch several months later".

He was not asked why he had left the union, or why he was given a payout by the union. It would have been useful to ask if there were conditions attached to the payout, or when he broke up with Gillard, and why.

When the principal player in the biggest federal scandal in decades calls for an interview you don't let the opportunity slip by. What was 7.30 thinking? Leigh Sales won a Walkley for her interviews last week.

Why wasn't a senior experienced journalist, like Sales or Chris Uhlmann, put on the job?

Egregious conduct at the core of the AWU saga

Judith Sloan, Contributing Economics Editor, The Australian , December 04, 2012

ONE of my friends was having lunch recently with a property developer. A group of union officials, wearing shirts with the Construction Forestry Mining and Energy Union logo, came into the restaurant.

The property developer immediately excused himself and went over to the table where the CFMEU officials were seated. He offered to pay for their lunch. One of the men pointed in the direction of another diner. Evidently, this person had already agreed to pick up the tab and so our property developer was off the hook for this meal, at least.

The point of telling this story is that there seems to be some confusion about one of the central elements of the Australian Workers Union slush fund saga. This core and egregious element revolves around the ability of union officials to extort money from companies in exchange for outcomes that have nothing to do with furthering the interests of the members.

In this case, the union officials, Bruce Wilson and Ralph Blewitt, were often selling the members out in order to extract money, directly or in-kind, for their personal benefit.

The fact that AWU was used in the title of the AWU Workplace Reform Association is a critical part of the story. This ruse enabled the dynamic duo to pass off the association as part and parcel of the AWU. In so doing, companies were led to believe they were dealing with the union proper.

Let's be clear about one thing. Even under the laws that operated at the time, it was not permissible for union officials to sell industrial peace or to extract certain favours in exchange for encouraging members to undertake work that they might otherwise, and quite legitimately, be reluctant to do.

It has been reported that work undertaken by AWU members on a site with contaminated soil was sanctioned by Wilson and Blewitt, even though one of the purported aims of the association was to promote workplace safety.

One of the excuses Julia Gillard gave all those years ago for her role in the incorporation of the AWU Workplace Reform Association was its purpose to fund the re-election of the union officials. It is true that, under the law, it is illegal for union officials to use union funds to assist in the election of officials. This is as it should be. After all, the members are best served by open and competitive elections for union officials. Allowing an incumbent group of officials to preferentially gain access to union funds to promote itself at the expense of other candidates undermines the integrity of elections. It also reinforces the power of incumbency.

To get around this quandary, it is not uncommon for like-minded union officials to band together and set up joint bank accounts to finance their re-election campaigns. Oftentimes they will commit to weekly deductions from their pay, which is then deposited in these joint bank accounts. All this is completely fair and reasonable.

Where the situation can become more dubious is the holding of special fundraising events, such as dinners, the proceeds of which can be added to these special re-election bank accounts. Indeed, Gillard even referred to dinners as being an example of slush fund activity in her exit interview from Slater & Gordon.

Companies will sometimes be asked to send representatives to attend these dinners, with the price of attendance completely out of line with the actual cost of the dinner. The surplus can then be deposited into the bank accounts. The implicit message is that industrial co-operation can be assisted as a consequence of these donations. You scratch my back and I'll scratch yours.

Do these sorts of arrangements help the actual members of the union? I think not. After all, if the union officials are really doing their jobs serving the interests of the members, as opposed to striving to retain their jobs as union officials, with the associated perks, they would not have a bar of cosy deal-making with companies.

Should the companies bear some culpability for being a party to these arrangements overpaying for dinners, directing funds to dubious accounts and the like?

Given the cost of hold-up in the case of large construction projects, some companies may find it easier to go along with these dodgy transactions than resist. But paying a ransom only encourages the continuation of the activity.

Should we believe that the AWU Workplace Reform Association is an isolated example of dishonest and unscrupulous behaviour by a small group of union officials? In fact, there is a current example of an entity carrying a union name that, on the face of it, appears to be a vehicle for companies to make donations that personally benefit one union official. This is well known in union circles.

Last year, we witnessed a long-serving union official write a union cheque to settle a personal defamation matter. And his excuse? You defame me, you defame the union, even though the matter at hand had nothing to do with the union or its members.

To my mind, the sorry tale of the AWU slush fund is not just about what the Prime Minister knew and did not know and actually did, but how the slush fund was able to extort money from companies by selling out the union membership. The broader issue is the lack of effective legal constraints on the conduct of union officials, as well as the cultural norms of some unionists.

What is required is a broad-ranging inquiry into the governance and conduct of trade unions, leading to a series of recommendations that will ensure that union officials can act only in ways that benefit, and are accountable to, the members. If it is good enough for companies to be regulated to ensure that shareholders are kept informed and protected, it is good enough for registered trade unions.

return to letters list